Foundations of Economics, 8th Edition

29.2 Aggregate Demand

MyEconLab Concept Video

The quantity of real GDP demanded (Y) is the total amount of final goods and ser­vices produced in the United States that people, businesses, governments, and foreigners plan to buy. This quantity is the sum of the real consumption expenditure (C), investment (I), government expenditure on goods and services (G), and exports (X) minus imports (M). That is,

$$Y=C+I+G+X-M.$$

Many factors influence expenditure plans. To study aggregate demand, we divide those factors into two parts: the price level and everything else. We’ll first consider the influence of the price level on expenditure plans and then consider the other influences.

Aggregate Demand Basics

Aggregate demand is the relationship between ...